Real Estate Appraiser Tips » Appraiser AMC Tips

WA Appraiser Dave Towne: TAVMA letter to FRB Regarding Customary and Reasonable Fees

http://realestateappraisertips.info/ — Thu, 12 May 2011 20:36:53 +0000

http://www.realestateappraisertips.info/ - WA Appraiser Dave Towne: TAVMA letter to FRB Regarding Customary and Reasonable Fees. Dave sent this email out to appraiser on 5/12/2011 at 12:45pm.

Appraisers……

Attached is the recent letter from TAVMA (Title Appraiser Vendor Management Association) to the FRB complaining about the contents of a survey signed by over 8,000 nationwide appraisers who are concerned about Presumption 1 in the FRB Final Rules.

The Rules were written to comply with the Dodd-Frank law, except that Presumption 1 was added by the FRB to give AMC’s an ‘out’ in how they compensate appraisers.

A little history: per federal banking regulations, banks who have their own appraisal ordering departments have never been able to withhold a portion of the appraiser’s fee to pay the overhead of that department. But in approximately 1984, AMC’s began offering appraisal servicing to banks, and some banks closed their in-house appraisal departments. Because AMC’s are independent businesses, they don’t fall under the banking regulations (or at least that has been the presumption, and never successfully challenged so far). So the business model was started then which enabled the AMC’s to capture a portion of the ‘customary and reasonable’ fee the appraiser was charging the bank.

However, the AMC model only became possible because appraisers allowed it to happen by accepting the ‘bribe’ of continued assignments in return for a portion of their fee. [Full disclosure: I’m one appraiser who had to accept this situation to continue appraisal work. But I have a minimum fee for service, and say ‘NO’ often.]

Over the years, ordinary non-mortgage lending C&R fees have changed very little throughout this nation. Depending on location, those fees are $350-$450 for a typical, non-complex full appraisal. These fees have been held somewhat in check by technology improvements, but also because the lenders are reluctant to charge borrowers more for the appraisal…even though overall lending fees have increased.

In 1989 Congress passed the FIRREA law. Part of that law has the provision that ‘production people’, i.e., the loan officer, cannot directly select the appraiser. (Note that this is 21 years before the HVCC.) In the early 1990’s, more and more banks off-loaded their in-house appraisal departments to AMC’s, and in turn those AMC’s began capturing more of the appraiser’s once Customary and Reasonable fee – that the lender was charging the borrower – and then transferring to the AMC.

What’s allowing this to continue is the high number of appraisers who accept the ‘bribe’ and choose to crank out appraisal reports for actual net fees that are far lower than a professional should accept, and are far lower than they would earn if AMC’s were not the dominant market participant they are now.

Exacerbating this situation is appraiser unwillingness to join with their peers into one cohesive body, such as the real estate agents have with NAR, and mortgage lenders have with NAMB, etc. Appraisers are fragmented and weak, and the lender’s and AMC’s know it. Secondly, the major players (regulators and lenders) who participated in the greatest worldwide financial meltdown in human history are still at the helm of the listing ship. Their own self-interests are not allowing the ship to get back on an even keel. And third, the regulators have basically capitulated their oversight at the moment, and expect appraisers to file multiple complaints with several agencies for any assignment that does not pay what the appraiser decides is a C&R fee.

So cycling back to the TAVMA letter, it’s their contention that their business model of stealing a portion of the appraiser’s C&R fee should be accepted without question – primarily because so many appraisers have accepted the bite of the apple (bribe, noted above) for close to three decades.

The only way to earn what you should earn is to learn to say NO to the abysmal fees some AMC’s offer. Yes, some other unskilled, less than professional ‘appraiser’ will snap up the low fee assignment…in the short term. But the long term probably will have you coming out on top because the lesser skilled ‘appraiser’ is going to be terminated for poor quality reports.

This also assumes your work product is superior, USPAP compliant (which lesser skilled ‘appraiser’ reports won’t be), with more than the minimum reporting requirements included. Work to be a professional and you will earn a professional fee.

Dave Towne
Certified Residential RE Appraiser
Towne Appraisals
Mount Vernon, WA
360-708-1196
&
Appraiser Education Service

The Appraisal Show: How Does Big Banks Halting Foreclosures Impact Home Appraisers?

http://realestateappraisertips.info/ — Mon, 11 Oct 2010 16:58:29 +0000

http://www.realestateappraisertips.info/ – The Appraisal Show: How Does Big Banks Halting Foreclosures Impact Home Appraisers?

Tinna and Bill discuss Bank of America placing a moratorium on foreclosures, ask the AMC’s to put their nose back on their own face, picture of the week and the out-take is back. Check out The Appraisal Show‘s website!

Coester Appraisal Group’s New Vernon Davis Professional Football Player Video – Fantastic Video Marketing Example!

http://realestateappraisertips.info/ — Wed, 25 Aug 2010 12:57:14 +0000

http://www.realestateappraisertips.info/ - Coester Appraisal Group’s New Vernon Davis Professional Football Player Video – Fantastic Video Marketing Example!

Professional Football Player Vernon Davis shows the lending community why Coester Appraisal Group a national appraisal company is your best solution for appraisal services. As a national appraisal management company Coester has over 40 years of valuation experience and can ensure your valuations are the best in the business. The way valuations should be!

Dave Towne: Another Nationwide Appraiser Fee Survey

http://realestateappraisertips.info/ — Wed, 25 Aug 2010 12:45:21 +0000

http://www.realestateappraisertips.info/ – Dave Towne: Another Nationwide Appraiser Fee Survey

Appraisers………..

An appraiser in Pennsylvania sent me this link to another nationwide appraiser fee survey……actually it’s within the typical mortgage closing costs for each state, provided by BankRate.com.

http://www.bankrate.com/finance/mortgages/2010-closing-costs/united-states-closing-costs-map.aspx

This survey will show the ‘average’ appraisal cost for each state. Click the link above, then click your state. Scroll down the list of charges to find the Third Party fees, including appraisals.

This is the second currently available complete independent nationwide survey which appraisers can use to set Customary and Reasonable fees for their own area. Both are based on many thousands of reports already submitted.

The other national survey is the alamode Mercury Network Appraisal Fee Reference, which breaks out ‘median’ fees by every county in the US. Find it at: http://www.mercuryvmp.com/analytics/

When I compared the two surveys for Washington state, they are very similar. So it validates the accuracy of these two independent sources which appraisers can use to determine their own Customary and Reasonable fees.

Dave Towne
Towne Appraisals
dtowne@fidalgo.net
Mount Vernon, WA
360-708-1196
& Appraiser Education Service

Appraisal Scoop: Geographic Competence Not Clearly Understood

http://realestateappraisertips.info/ — Thu, 19 Aug 2010 08:56:10 +0000

http://www.realestateappraisertips.info/ – Appraisal Scoop: Geographic Competence Not Clearly Understood

Appraisal Scoop Guest Author, Micheal W. Armentrout, VP AM Appraisals, Inc., discusses how Geographic Competence Is Not Clearly Understood, Read the entire article is at this link. This is a thought provoking article and certainly worth your time to read. Tips is providing two snippet paragraphs below:

” It seems as though a recent trend with some clients (primarily AMC’s) has been a concern over the appraiser’s ability to work in certain markets. After all, if we have never or rarely worked in a specific locale then obviously we are not qualified to work there; right? Well before jumping directly into USPAP we should clear up some things.

If geographic competence was really a growing issue, realtors and homeowners must realize that it would not only be reflected in under-valued appraisals but inflated ones as well. A lack of competence in any market will always lead to erroneous and unreliable reports. In my opinion, HVCC has not been a good policy but I don’t believe it has caused a rise in the number of appraisers working in unfamiliar territories. Of course some rogue appraisers do occasionally violate the requirement to be knowledgeable in whatever market they are completing appraisals but no significant pressure to do this was brought about by HVCC alone.”

Image Source: Bill Cobb, Appraiser

Real Estate Appraiser Tips: Appraisal Challenges Straight from the Battlefield

http://realestateappraisertips.info/ — Wed, 09 Jun 2010 15:02:04 +0000

http://www.realestateappraisertips.info/ - Real Estate Appraiser Tips: Appraisal Challenges Straight from the Battlefield

The Keeping Current Matters Blog has a must read response from Appraiser, Chip Wagner. The article can be found here and here’s a snippet below:

“There are many challenges facing the real estate industry today, and one of the biggest is the abundance of foreclosures and short sales proliferating the marketplace in many areas of our country.

I am a third-generation, professional residential real estate appraiser with over 20 years of experience in the Chicago area, and I have never seen a marketplace like I have over the past 2-3 years.

The first issue is the Home Valuation Code of Conduct (HVCC), and the second issue is the marketplace itself. The HVCC has given the appraisal profession a major blow, and the most experienced of residential appraisers are leaving the industry. The intent and desire was to insulate appraisers from lender-pressure to direct values (push the numbers higher). The unintended result has allowed the additional layer of insulation (appraisal management companies) to seek appraisal services from appraisers willing to do the work for appraisal fees of 25% to 75% less than our fees before the HVCC was enacted in May 2009. In many cases, the quality appraisers have diversified away from the business, and this in turn is leading to less-experienced appraisers trying to survive in the most complex real estate market anyone has seen since our Great Depression. Geographic competency has become a major issue as out-of-area appraisers are going into areas they have never been to for the work.”

To Read the remainder of the article, visit: http://kcmblog.com/2010/06/09/appraisal-challenges-straight-from-the-battlefield/

About Chip Wagner:

ALVIN “CHIP” WAGNER, SRA, SCRP, RAC Member
A. L. Wagner Appraisal Group, Inc. ~ Real Estate Appraisers & Consultants
Specializing in Relocation, Litigation & Lending Appraisals Naperville ~ Plainfield ~ Chicago ~ Flossmoor
1807 S. Washington Street – Suite 110, Naperville, IL 60565
Telephone 630/416-6556 ~ Fax 630/416-6591

website: www.wagnerappraisal.com

blog: http://chipwags.blogspot.com/

Home Appraisers: Demanding Customary and Reasonable Fees for Appraisers

http://realestateappraisertips.info/ — Wed, 09 Jun 2010 11:13:41 +0000

http://www.realestateappraisertips.info/ - Real Estate Appraiser Tips! Home Appraisers: Demanding Customary and Reasonable Fees for Appraisers.

Working RE Magazine‘s Editor, David Braunder, delivers tips on getting closer to receiving “Customary and Reasonable Fees”.

“Editor’s note: However you feel about the wisdom or the right of your fellow appraisers to work for as much or as little as they choose, the lowest bidder is certainly not the intent of customary and reasonable. This issue is vital to taxpayers, Congress, FHA and appraisers and it’s time for the regulators charged with protecting the public interest to step up to defend a concept they claim to endorse. The following story, excerpted from the new summer issue of Working RE magazine, is a call to action on the issue. The print magazine is now in the mail to 80,000 real estate appraisers. To access the issue now, please click the cover image at left.

Demanding Customary and Reasonable Fees for Appraisers
By David Brauner, Editor

It’s time for FHA, Congress and others to step up to defend a concept they claim to endorse. Here’s why the issue of customary and reasonable fees are vital to taxpayers, Congress, FHA and you.

FHA wrote into recent regulations that appraisers should be paid fees that are conducive to quality work; customary and reasonable is the language they and others use. FHA did this, one surmises, in reaction to a barrage of feedback from appraisers that many AMCs shop for the lowest bidder when choosing appraisers and that this, along with pressure for unreasonably quick turn times, is hurting appraisal quality (see Appraisers Talk, FHA Listens, WorkingRE.com, Library, Issue 23).

The concept is widely accepted as important. There is similar customary and reasonable language regarding appraisal fees contained in federal legislation before Congress and in various state bills, enacted and proposed, designed to protect appraiser independence and/or to regulate AMCs.”

Continuing Reading The Entire Article Here: Demanding Customary and Reasonable Fees for Appraisers

About the Author

David Brauner is Editor of Working RE magazine and Senior Broker at OREP, a leading provider of E&O Insurance for appraisers, inspectors and other real estate professionals in 49 states (OREP.org). He has covered the appraisal profession for over 16 years. He can be contacted at dbrauner@orep.org or (888) 347-5273. Calif. Insurance Lic. #0C89873.

Home Appraisers: This A Must Read – HVCC Impacting Appraisals? Say It Isn’t So

http://realestateappraisertips.info/ — Tue, 30 Mar 2010 04:05:15 +0000

http://www.realestateappraisertips.info/ - Real Estate Appraiser Tips: Appraisers: THIS IS A MUST READ – HVCC Impacting Appraisals? Say It Isn’t So! Click Below to read this

Appraisal Scoop’s Guest Author, Michael Armentrout, discusses the topic:

Could HVCC be promoting an environment where appraisals are actually being deflated?

It involves an AMC, which was warning of a potential trend forming in regards to contract prices not meeting purchase prices.

I would highly recommend you take out several minutes of your day and slowly sift through this article as it’s highly relevant to your career and to your “liability”!

I just reported to you that First American Core Logic is reporting over 11,000,000 US Homeowners are now in negative equity situations and that many US homeowners won’t see positive equity situations until late 2015 to 2016-2020. With this in mind, wouldn’t you think that you as a home appraiser will face many years of analyzing purchase agreements where some will not appraise and that you shouldn’t be at all surprised by this? Again, not all housing markets are created equal as some are in better condition than others and the better markets may not experience continued downward pressure from distressed sales. Is the NAR (behind the scenes with all the bickering and huge lobby) and now AMC’s (download the AMC Letter here) positioning themselves to apply pressure to appraisers to go more easy on home purchases, ignoring market conditions? I’m not sure, but Michael’s article on Appraisal Scoop is certainly food for thought!

Source: http://appraisalnewsonline.typepad.com/appraisal_news_for_real_e/2010/03/almost-one-year-after-hvcc-was-implemented-it-seems-as–though-little-has-changed-in-how-the-vast-majority-of-appraisers-vie.html

Dave Towne: TAVMA Again Demeans Appraisers

http://realestateappraisertips.info/ — Tue, 23 Mar 2010 11:44:34 +0000

http://www.realestateappraisertips.info/ - Real Estate Appraiser Tips: Dave Towne: TAVMA Again Demeans Appraisers

From Dave Towne’s Email on 03/22/2010:

http://www.dsnews.com/articles/tavma-disputes-findings-of-recent-appraisal-fee-analysis-2010-03-22

Remember folks…. ‘What you choose to accept’ is not the same as ‘what you’d normally charge’ for an appraisal assignment in your area. Mr. Schurman’s position is that what AMC’s pay and that you accept is the ‘typical’ fee for service. That’s a load of bovine essence.

Remember also that Mr. Schurman is a paid mouthpiece for an association of AMC’s. He reveals, through his writings, what they believe appraisers should be…wards of the AMC state.

How many of you have the desire (or perhaps gonads) to turn down AMC ordered FHA assignments unless they pay you what you’d normally charge for such an assignment from a non-AMC client? Until appraisers begin doing that, the entire appraisal industry suffers.

Don’t believe that the AMC fee is ‘usual and customary’ as FHA allows for your area…because it is not…except in very rare cases.

Dave Towne, Appraiser Education Service

A Horrible Week Working For An AMC and New Mexico New AMC Law…Smile

http://realestateappraisertips.info/ — Fri, 05 Mar 2010 13:04:32 +0000

Real Estate Appraiser Tips: A Horrible Week Working With An AMC and New Mexico Governor’s New AMC Law…Smile!

This week has been rather difficult, which is the reason I haven’t posted as often on Real Estate Appraiser Tips! I started taking orders from an AMC that just recently began automated calls to appraisers for order acceptance. I hadn’t worked with this AMC in some time and received three FHA orders from them the week prior. What I received from them, only after accepting the orders, was “13 Page Appraisal Orders” for each assignment. I’ve been appraising for almost 20 years now and have never received a 13 page appraisal order.

Within these 13 pages was some of the “extras” “their client” requires above and beyond normal FHA appraisal requirements. Just one of them was that their client would not accept MLS photos for listings used. Oh No! On two of the orders, I had to drive all the way back out to the areas to take real listing photos. Another was that it wasn’t good enough for me to include 2 photos inside the attic, the “head-and-shoulders” inspection verbiage and the overall statement that SUBJECT MEETS FHA MINIMUM STANDARDS for existing dwellings outlined HUD Handbooks 4150.2 and 4905.1. No, they wanted an additional comment that the attic itself complied with FHA guidelines and accused me of skirting “the issue”. What Issue? Then they told me to add the words “covered porch” or “uncovered porch” to my sketch. I have yet to have someone send me a photo of an “uncovered porch”. There is no such thing as an “uncovered porch”! There’s wood decks, open patios, aluminium patios, stone walkways, but no uncovered porches that I’ve ever seen.

The straw that broke my back on Wednesday morning was their telling me that the photo below, my Comp. #1, was an MLS photo and said it needed to be replaced with a real photo. I explained that that was my mirror in the photo and had to send them a photo of my SUV to prove the color of my SUV. Talk About Insanity!!!

I NOW UNDERSTAND WHY “AMC’S” IS BECOMING A FOUR-LETTER WORD! AND, THIS INSANITY IS THE FUTURE OF OUR APPRAISAL INDUSTRY?

I HOPE THAT ARTICLE ON APPRAISAL SCOOP WAS RIGHT ABOUT ALL OF THESE STATE AMC REGULATIONS DRIVING AMCS OUT OF BUSINESS!

And, don’t we just love that AMC where their client’s extra requirement is for us to report the comps previous sold history (price and date) back to infinitiy (beyond just 12 months) and if you can’t find any sold history within your Legal News, to add a comment as to why?

By Thursday, after 3 revisions for one report, I was about ready to pull my hair out over this insanity.

Then, I wake up early this morning and see Brian Davis’ FeedBlitz email: New Mexico Governor Signs Appraisal Management Company Legislation into Law – Puts AMCs “On Notice”! AND, there’s a smile from ear to ear.

There’s two important aspects (hopefully obstacles for AMC’s) about this new law is that are of note. First, it requires AMC’s to post a surety bond. To me this important because there have been reports of new AMC’s setting up shop, hiring appraisers and then not paying them. Why allow AMC’s to get away with such illegal action? And, why allow appraisers whose license has been revoked or suspended from starting an AMC after the fact?

Second, it requires AMC employees who review appraisals to be “geographical competent” to complete the review. THIS IS MAJOR! I’ve always wondered about this issue. How can a reviewer in CA know the pulse of a market in Kissimmee FL? And, why do I see Appraiser Reviewer Job Announcements for major lenders where the reviewer must move to Atlanta or Chicago or New York to review home appraisals performed nationwide? I DON’T GET IT AND NEITHER DOES THE GOVERNOR OF NEW MEXICO!

Try To Have A Great Weekend! Bill Cobb